Bonheur ASA
OSE:BONHR
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Bonheur ASA
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Good morning, and a very welcome to our second quarter presentation for Bonheur ASA. And as usual, our CFO, Richard Olav Aa, will take you through the figures. We will then also have the CEOs for the daughter companies present their companies. And then we will finish off with the Q&As. So Richard?
Yes, Anette, thank you. And also a very good morning from me. Before we dig into the numbers, I would like to start saying that the second quarter results show the benefit of having a slightly diversified portfolio. We have seen some drop in the [Audio Gap], so that's now back to a kind of a more normal level. While on the other hand, we have seen strong improvements on the Wind Service side, which is a really buoyant market for the companies there, and also a good recovery on Cruise. That's more than compensating the drop in the Renewables earnings. So all in all, we have improved earnings compared to the second quarter last year, not at least thanks to somewhat diversified portfolio.
So if we then go into the numbers. On a consolidated basis, we have improved revenues with slightly less than NOK 0.5 billion. So operating revenues came in at NOK 2.8 billion. EBITDA was NOK 727 million, an improvement from NOK 562 million last year. We see somewhat of a similar improvement on the EBIT, we have a slightly higher depreciation. But what we see, and I'll come back to this, it's the net result after tax improved quite a bit from NOK 161 million to NOK 554 million as we have some special items on net finance and tax that I will come back to.
Also, the results continue to strengthen our financial position. And I think the equity ratio now of the parent at 75.6% is among the highest we have ever had in Bonheur. Also, cash in parent stands at NOK 2.3 billion and a strong cash position, and I'll come back to that.
Going quickly through the various segments, and the CEOs will come back to that in more detail, but on the main things that are going on in the segments, but on the financial side, we have the following trends. On the Renewable Energy, EBITDA came in at NOK 277 million, which is down from NOK 502 million. And there are really 2 things that drive that. It's the drop in power prices. They're still at a good level if you look at Norway, Sweden and the U.K., but they're much lower than last year and they're also much lower than the first quarter.
What also came in this quarter was very low wind speeds. Generation was 32% lower than P50 and 26% lower than we had in the second quarter last year. We have gone back to 2016 and looked if there is something abnormal in the trends around the wind speeds, and we cannot find anything abnormal and this variation is within normal. Ivar Brandvold will come back more to the wind speeds, but on overall level, it looks like deviation, but not a deviation out of the extraordinary.
Then a major achievement in the quarter was the Codling Wind Park, which was awarded a 20-year CfD for a 1.3 gigawatt capacity, and Lars Bender will cover that in more detail under his presentation. Then on the Wind Service side, we see a very buoyant market for the service companies, maybe especially for Windcarrier. And EBITDA this quarter came in at NOK 320 million, which is up from NOK 106 million same quarter last year. Windcarrier continues to build backlog, Alexandra will come back more to the details there, and the Tern vessels had close to 100% utilization. Strong demand also for the services -- for global Wind Service, continues to grow and had a normal operational quarter.
Then we're very happy that the Cruise lines are back into black figures and had an EBITDA of NOK 132 million and a strong improvement from the loss second quarter last year of NOK 42 million. Several factors behind this. Obviously, we have been cruising with 3 ships through the quarter, while second quarter last year, Balmoral was phased in. Occupancy has improved from 58% to 69%. 69% is still low. So it shows the earning potential of Cruise lines if we can really drive occupancy up. We're not happy with the 69%.
Net ticket income stands at GBP 191, which is the same level as last year. And given inflation and everything, it's not fully satisfying either. So we have more to go on the revenue side on Cruise lines, but after all, we are on a good way to recovery. And last summer, we were hit with the bunkers really going sky high, especially the diesel, following the invasion of Ukraine. That is now more normalized, and have a bunker saving of GBP 5 million. Thus also going on consumption, a lot of things we're trying to do to reduce consumption. Demand is stronger. We see an improved demand for Cruises both this year and next year. Other investments, not much to report. EBITDA for NHST is at the same level as last year, and the cost in other units are also on the same level as last year.
Yes, on the consolidated summary already commented on the revenues. But then we have a special item under the OpEx, and that is the high price levies in the U.K., this extra tax on high prices in the U.K. I think our team in the U.K. did a very good job influencing the framework for this and managed to get it calculated over full calendar year and not on a monthly and quarterly basis. So when we accrued in the first quarter, it was based on the forward prices for the rest of the year. But now when we update forward with new and much lower forward prices, we can see that we can reverse quite a bit of the high price levies we did in the first quarter.
So had it been on a monthly or quarterly basis, we could have not reversed this OpEx of NOK 84 million this quarter. And we also have on the tax side another victory in a way that -- and very strong credit to Ivar and his team that have been able to defer the Norwegian ground rent tax for at least a year. So we have reversed NOK 17 million in ground rent tax also in the tax cost line. So yes, it's really a pity with these high price levels and ground rent taxes on renewable energy. That is really contrary to what we need and what the world needs, but at least a very good effort from Fred. Olsen Renewables and Ivar on tackling these taxes and get them at least better or deferred. So that results in more than NOK 100 million improvement this quarter.
Then on net finance, we have a positive net finance this quarter of NOK 93 million, which is an improvement of NOK 127 million. We have currency effects on our cash position due to the weak Norwegian kroner. We also continue to gain a lot on the interest rate swaps on Fred. Olsen Renewables in the U.K., where we are in a very fortunate position where 75% of the interest rates on the long-term loans are hedged on quite attractive rates. So they continue to generate unrealized earnings, but underlying that, interest paid by Fred. Olsen Renewables and their partners are significantly below the market rates currently.
Then on tax cost, we came out with a positive tax cost. We have reversed the ground rent tax. Obviously, now we start to generate quite good profit in FOWIC and Cruise lines, which are in the dollars tax regime. We also have some currency effects in the tax. So we get the net results of NOK 554 million, which is an improvement of close to NOK 400 million. And as we know, are improving in units. Renewable now owns 100%. The shareholders of the parent company get a much higher shareholder result, NOK 439 million, which is an improvement of NOK 453 million.
Revenues improved by NOK 447 million, and we see the main drivers behind that, the drop in Renewable Energy of NOK 263 million; while Wind Service, an improvement of NOK 418 million; and Cruise with NOK 275 million due to the reason already covered.
EBITDA, NOK 165 million improvement on the Renewable Energy side. We see then the change is compensated by this reversal of the levy on Renewable Energy. And on Wind Service, the increased revenue they carry very well into the bottom line with NOK 214 million. There I could say a lot of the increased revenue also comes from GWS this quarter, which has normally a much lower margin due to the capital-light nature on global Wind Service compared to FOWIC. And Cruise, an improvement of NOK 174 million, driven by revenues, but also the lower bunker cost and other. There are no big movements.
Then on the group capitalization. Like I said, we continue to strengthen. And if we now look at our 100% owned entities, we have a cash position of NOK 3.9 billion by the end of the second quarter compared to an external debt of around NOK 3.5 billion. We see that all segments are continuing to strengthen their cash position; Renewable Energy, where we control 100%, close to NOK 400 million; Wind Service, FOWIC continue to build cash, NOK 831 million, and now more than fully financed for the crane upgrade; and Cruise lines also continue to build cash.
When we look at the joint venture, we can note a particular item that Renewable Energy, the joint venture in Scotland, they sit with quite a lot of cash at the end of the second quarter following the high prices this winter, and that is not to be distributed after the government reporting is done with the lenders. So a large part of this NOK 1.6 billion sitting there in Renewable Energy is going to be distributed out to the owners. And Fred. Olsen Renewables have approximately 51% of that cash of NOK 1.6 billion.
Yes, and then Wind Service, which as you know well, GWS and so on, sits with -- and returns sits with more than NOK 0.5 billion in cash. So a solid financial position that has continued to strengthen this quarter.
Finally, on the sustainability reporting, we put out the sustainability reporting in close connection with our first quarter results. But just an update on this, that we have continued to work on this, and we are well-aligned with our Audit Committee how to take this forward. We have it high on the agenda in all operating subsidiaries, and it's been reviewed by the respective Boards, and the subsidiary reporting now is being published or have been published. And we have spent a lot of time on how to reduce [indiscernible] and reduce emissions on the Cruise vessels.
We have done this taxonomy reporting that you see in the circles there on turnover CapEx and OpEx to see what is eligible and aligned. And this has now been discussed with bondholders and lenders and shareholders and it's really appreciated that we now have the taxonomy reporting already in a good place. And going forward, we seek some external inputs to kind of further hope to see if we can improve in the sustainable reporting and find a good balance of what is bringing value and real improvements and not go in the trap of just letting out words. That's not our style at all. So good progress here as well, that I hope is appreciated by all on the call.
So by that, Anette, I leave it back to you.
Good. Ivar Brandvold, Co-CEO of Renewables is next. Ivar?
Yes. Thank you. Good morning, everybody. Some highlights from the Renewables for this last quarter. This is the slide we show every quarter and this is showing the project that we have in various spaces and the activity in the development phase. I'll come back to Fäbodliden 2, which is in construction phase. We are having 6 consented sites that are in preconstruction phase and being considered for investment decision, and we have quite high activity in the development phase. The most pronounced this last quarter is in Northern Sweden, where we have a large project of 300 megawatts. That has passed through the community Vitol, and we don't see any hurdles in terms of also the consenting work for this site. So that's quite a good way and a good target now for the third and fourth quarters going forward.
As to the production side, we are forecasting lower winds totally in 2023. So the forecast that you see to the right here, a little bit more than 2 terawatt hours, has been reduced due to wind results of the first half. So this is then the actual wind for the first half and the forecasted P50, and actually the expected levels for the second half of this year, taking us a little bit below what we achieved last year, but within normality, as Richard mentioned. So if you look at the market, as such, you can say that the most pronounced is, I would say, 2 things. One is the wind, which you can see in the black curve in the upper left there, which has been quite poor in the first half, quite similar to what we had actually also in 2021. And you can see how this varies with the quarters and years all these last years.
And the second is that there is some more normality into the market. Now we see the coal prices coming down again and we see the gas pricing. And there is, of course, still a very strong link between the power prices and the gas prices, and also that the hydrological balance in Sweden and Norway is now very close to what we would say normal. So going forward, I think it's macro events that could affect the power price, and it would be also the temperatures and the weather going forward. So far this year, it's been influenced by the mild winter.
In Northern Sweden, we are continuing the construction of Fäbodliden 2 Wind Park, which is in addition to Fäbodliden already in production. It's 4 more turbines being added. And the project is on schedule and on target to be completed by the end of 2023. And when you look at the bottom right here, you see it's a test run that we have done with a transportation-type vehicle that we're going to use for the wind, the blades themselves. And so we're doing a test run from Umu and all the way up to the sites just to confirm and verify that there are no obstacles on the way. And you can see the length of the blades here. And even if you can see at the far right, you have this, I would say, the tail showing the actual total length of the blades. And we're talking about just centimeters of tolerances when we are going to move the blades in.
Richard also mentions the tax situation. This is a slide that we also presented earlier that shows the actual taxes that we will pay. And to the right there is an example then given that we have GBP 150 per megawatt hour power price. It shows for 2023, but it has now been delayed in Norway, so it's not relevant for 2023, but the actual numbers are still relevant. So what is now happening with these taxes? And when it comes to the U.K., the EGL, which is the levy and the taxes that is now being imposed, has now been through royal ascent. So it has become lower, and it's now going to last for 5 years and a quarter starting from 1st of January this year.
And in addition to what Richard mentioned as to the averaging of the year on the power price, indexation on the 75 [Audio Gap] to kick in from [Audio Gap] important, particularly now when we are seeing the high inflations. And also, there's a GBP 10 million allowance, so these are in a way dampening the effect of the levy as such. When it comes to Norway, there was a consultation process that ended in the first quarter. What was interesting to see and I think very important to see is that the whole industry, not only on the wind side, but also on the main offtakers on power, like the Regal [indiscernible] companies, also consistent message back, basically that there is not a basis for ground rent tax. If it is going to be implemented, it has to be made cash neutral, as we see with gas and hydro and the oil and gas and water, or should we say, the hydro side. And if it's to be implemented, it should not be implemented on existing wind farms. So it should be made cash neutral and not implemented on existing wind farms.
The government announced earlier in the quarter that they will delay implementation of the ground rent tax, and it will then, now, planning-wise, take effect from 1st of January 2024. We are a little bit uncertain on what the plan now is. It could be proposed as a separate bill in the fall or it could be proposed in conjunction with the national budget for 2024. For us, we would like to see it as a separate bill if it is to be implemented, but the position of our company and the position of the industry remains unchanged. We do not think there is a basis for the ground rent tax. Thank you.
Thank you, Ivar. Next out is Lars Bender, CEO of Fred. Olsen Seawind. You had a very busy quarter, Lars.
Yes. Thank you and also good morning from me. As Anette just said, we've had a very busy quarter, but also a very positive quarter. And that in particular relates to the success and milestone we've achieved on Codling Wind Park, which I will come back to later. But first, I'll go through the other core markets and give you an update on where we stand in those.
And if we start in Scotland, we are developing the Muir Mòhr project together with Vattenfall in a 50-50 joint venture. It's a 798-megawatt project, floating. And as you are aware, we are currently developing the site. We are currently gathering data, and that is going well and, of course, according to plan. We have deployed a FLiDAR, so we are gathering wind speed data, we are gathering metocean data. We have commenced Geophys, which gives us the seabed conditions. So all in all, progressing well, and of course, with the aim of informing our consent application for the project later on.
We've seen in Scotland a change in cabinet secretaries and ministers in March, but we've not seen a change in policy or a change in direction. We still see a government that very much supports offshore wind and is very keen on progression, especially floating wind, as a part of Scotland's future economy. So we still remain positive in relation to seeing separate and dedicated CfD route for floating come 2026 and the future ahead from there. So overall, a stable quarter in Scotland with progress in the project towards the consent application.
If we then move to Norway, we've had a quarter with a lot of policy discussion in Norway. From our last quarterly presentation, we were very clear that the current framework of Sørlige Nordsjø II is not attractive. Since then, I think most of the industry have adapted that view, and everybody is in agreement that the proposition at that point in time was not attractive. Since then, some improvements have been made, but we are still waiting to see the final proposition from OAG and the Norwegian government on Sørlige Nordsjø II. Currently, the time line is delayed for the prequalification. So that's been delayed from 1st of August until 1st of September, also, of course, taking into account some of the input that has been given from the industry.
And then I will turn to Ireland and say a bit about Codling. And it has been, as Anette said, a very busy quarter, but also a very positive quarter because we achieved a very important milestone in Ireland. Together with our partner, EDF, we were successful in the first offshore wind auction in Ireland. August 1, we submitted a bid for 1.3 gigawatt and we're successful on that capacity. The average price in the auction was at EUR 86. Our price came in at EUR 89.8. It's a price that is fixed for 20 years under the CfD regime. And in addition, it has inflation protection at 100% until the FID and 30% in the operations phase. So for us, of course, a very important milestone. We've worked on this project for quite a number of years, and I think it's positive not only for our project, but also for the Irish offshore wind market that we now see is actually progressing.
Naturally, for Fred. Olsen Seawind and I think overall a strategic milestone as well. Since we established Fred. Olsen Seawind, we've been very keen on securing a CfD for Codling because it is a cornerstone in the company's future success. And with both the success in Scotland and now a CfD in Ireland, we have a really strong platform to develop the company further on. So I think very positive. Now the project will, of course, go into the next phase. We will look forward towards FID. The main activities that will now go one in the project is determined. It is preparation of the consent application, and it is, of course, also looking at stakeholder work and other things, all the things that are needed in order to bring the project to FID, which we currently target in '25, '26.
So a busy quarter, but also I think a very positive quarter with a very important milestone for Fred. Olsen Seawind. So with that, I will give the word back to you, Anette.
Thank you. Next out is Sofie Olsen Jebsen, CEO of Fred. Olsen 1848. She will join us on Teams.
Yes, thank you. I wanted to give you an update on the technologies that we're working on in Fred. Olsen 1848. So if you can go to the next slide. I will start off with the floating foundation BRUNEL that we're developing. The basic design group is progressing very well on BRUNEL with Rambøll, and we're also working with several different sub-suppliers to detail and optimize the manufacturing processes for the foundation. As I've told you in other presentations before, BRUNEL has several benefits that makes it stand out. And the main feature of it is this modular design and serial mass production that actually allows it to have lower steel cost in fabrication. The fact that it's built up of tubulars that can be serially mass produced.
Another benefit is the maintenance solution, specifically for BRUNEL, which you see on the lower picture here, where we have a North Sea barge with a crane on top of it, especially the same crane on top of it. And lastly, we have also been working quite a lot on discovering or detailing some power production benefits of BRUNEL. And these seem to be quite significant. We're working also with detail in this and finding out exactly how much increased power production developers may expect by using this foundation. All in all, these benefits with BRUNEL are quite unique, we believe, and makes it stand out in the floating foundation market.
Next slide, please. I would also like to touch upon the floating maintenance solution, which is the operation and maintenance solution for almost all semi-submersible floating foundations, where we have a crane developed that is placed on top of the foundation from a vessel. And we're working now on a FEED study for the solution. That's still ongoing, going to be for a few months more, where we're detailing all the technical, operational and commercial properties and finding out exactly what limits we can operate under, et cetera. So this is progressing quite well and we're in dialogue with many developers and also foundations that may need the solution.
Next, please. Lastly, I wanted to give you an update on Bolette, which is our floating PV power production system, where there are quite some exciting activities at the moment because this is becoming very tangible. We have launched the technology in the market since I talked to you last time, and it has been very well received. We've been contacted by all major developers working on floating solar that have interest in the technology. And I think they're interested from the fact that they see that they solve some of the solutions that we have in floating solar, where there are solutions for these systems to actually handle the winds and wave loads in combination. Bolette has all of this, but it also does it by being very cost efficient because it's a quite simple rope mesh where the panels move independently within the grid.
So I said there were exciting developments. That's because, as you see on the picture here, we are planning to put out a 50 x 50 meter pilot, 150 kilowatts outside Herøya Industripark in Norway. This is outside Yara's fertilizer factory, and it shows how floating solar can enable and help with green power to all different kinds of uses. So we're putting out this pilot later this summer and working very hard to then optimize the design and take all the lessons learned from this and further enhance the technology. We're also planning a larger pilot that will happen next summer. That will be a 3 megawatt unit, which will then take us to the level of the island size that we believe is the commercial right one. So the islands will be 3-megawatt ones and once put in the water, but you can multiply them as far as many times as you want.
So all in all, it's been a busy quarter for our technologies, but we're looking forward to even more exciting developments ahead. Thank you.
Thank you, Sofie. Alexandra Koefoed, CEO of Fred. Olsen Windcarrier. You've had quite a good quarter. Always into smiles.
Thank you, Anette. I would just like to dwell on this picture, a beautiful picture. I think that's subjective. Subjectively, I think it's a beautiful vessel in the front, but it also shows sort of the activity that it takes to build a wind farm, capturing at least 4 vessels in the field. But down to business, I'll update you a little bit on what we've been up to this quarter.
So Bold Tern, she completed her work on Greater Changua in Taiwan. She's installed 17 turbines for Ørsted. The wind farm is not completed yet. There are between 10 and 15 turbines left. Of course, we are in close dialogue with Ørsted to continue that once we have vessel availability either with one of our vessels or the vessel of Shimizu, our partner out in APAC. Bold Tern is currently on the Chang Fang Xidao project, and we expect her to be on that project for more or less the remainder of the year.
Brave Tern, she started the St. Brieuc project in France this quarter -- earlier in the quarter and it's basically more or less the same story for her. She is also expected to be on that project for more or less the remainder of the year. And Blue Tern is on the Neart na Gaoithe. She has been on that project for a long time, but now she's actually there installing turbines and finished her foundation scope, and we expect to install the first turbine on that project in, yes, probably a week or 2.
So all in all, all 3 vessels have mobilized 2 new projects this quarter and are expected to continue on those projects for the remainder of the year.
In terms of results, solid contract coverage and that's generated a revenue of EUR 39.1 million and EBITDA of EUR 19.8 million. In terms of backlog, we have also a development, I would say, a slight increase this quarter. Of course, we have completed some of our previous backlog. We have additional periods and options generated from existing contracts, basically increasing the utilization of the vessels in the near term. And some additional reimbursable scope is added, which is linked to a contract we previously talked about with significant sub-supplier scope. So all in all, still a very solid backlog for Fred. Olsen Windcarrier.
And in terms of tender activity and market outlook, very, very busy. And we also see a shift in the market where the clients are more concerned about securing capacity early, and also now an interest both in O&M, but also T&I for longer-term contracts. And in the last quarter, we have seen that type of contracts have been closed in the market. So definitely some changes in the market dynamics. Yes. And otherwise, generally, we see day rates are trending up, both on vessels with the existing frame and the upgraded vessels.
Thank you. Richard, we will talk about Cruise lines.
Yes. So final company update from Cruise. If you look at operation in the quarter, Borealis, Bolette and Balmoral operated very well. Operations are going good. Customers are happy with the product. The ships are performing well. So that's been very good this quarter. Braemar is still in lay-up. She is for sale. We see a strong improvement in the revenues on Cruise lines. So that is good and it's good that we are back in the black figures. But when we look at the occupancy this quarter of 69% and a ticket income of 191, we cannot be fully satisfied with this performance. So we think there is more to be done here. The product is strong enough but are we hitting the market in the right way is a big question mark when we are not able to increase ticket prices with inflation and still are at 69% occupancy.
On the positive side, it really shows the potential of the new ships. So if we can increase occupancy on Borealis and Bolette, and also to some extent Balmoral and continue to grow net ticket income, Cruise can actually be a very good performance segment for us. Number of Cruise lines, I already commented, was up because the Balmoral was operating fully in the quarter.
And finally, on the market side, the U.K. market has been surprisingly strong, even due to inflation and interest rates and what have you. Our segment is net savers and not net lenders, so that maybe have some effects of it, but we're always worried that some of this is pent-up demand following COVID. So we're following the booking trends very closely. But so far, we can see improvements both in '23 and '24. So we hope this will continue to be the case and that we can continue to drive up occupancy and ticket prices on the back of demand and a very good product.
So by that, I think we come to the end of the presentation. And just to run off, again, a good quarter where Wind Service and Cruise improvement more than compensate the drop on the Renewable Energy side. But still on the Renewable Energy side, an EBITDA of NOK 277 million in second quarter is a decent result.
And with that, we will open up for questions.
[Operator Instructions] We have no telephone questions at this time. Please continue.
I think everybody are out enjoying the summer. And I hope we have answered your questions in a good way through the presentation.